Lazarus Estates Ltd v Beasley [1956] 1 QB 702 Prest v Petrodel Resources Ltd UKSC 34, [2013] R v McDowell [2015] EWCA Crim 173 R v Singh [2015] EWCA Crim 173 Salomon v Salomon [1896] UKHL 1 Trustor AB v Smallbone (No 2) [2001] EWHC 703 VTB Capital plc v Nutritek International Corp [2013] UKSC 5 Woolfson v Strathclyde Regional Council [1978] UKHL 5 The application of the doctrine is frequently referred to as ‘piercing the corporate veil’. the controller as owning the company's assets directly in order companies were the alter ego of Mr Prest and that he was the 4. Family lawyers have welcomed the Supreme Court ruling in today’s landmark divorce case, Prest v Petrodel, as a victory for common sense. That a company has a separate legal personality from its shareholders is a well-established common law rule, derived initially from the case of Salomon v A Salomon [1897] AC 22 and reiterated in more recent authorities … statutory provision which gives the divorce court the power to vary to deprive the company or controller of an advantage that they owned by a company is being used as a matrimonial home, or perhaps Has Prest v Petrodel made the law clearer? settlement. The principal parties before the judge, Moylan J, were Michael and Yasmin Prest. In reaching judgment, the Supreme Court held that it would not be appropriate to pierce the corporate veil based on the facts of the case. The appeal in Prest arose out of ancillary relief proceedings following the divorce of Michael and Yasmin Prest. One of the main witnesses (a former The wife sought an order for the transfer of ownership of eight residential properties (including the matrimonial home), legal title to which was vested in two companies registered in the Isle of Man. Instead, the Supreme Court ruled that the only basis on which the companies could be ordered to transfer ownership of the disputed properties to the wife was if the properties were beneficially owned by the husband. divorce on the other, as much as between Mr and Mrs Prest and the However, it was made very clear that a court may only ‘pierce the corporate veil’ in those limited situations for the sole purpose of depriving that company or its controller of the advantage which they would otherwise have obtained by the company’s separate legal personality. retained, the ownership of the properties in dispute, i.e. John Wilson QC of 1 Hare Court analyses the Supreme Court’s judgment in the landmark case of Prest v Petrodel and considers its implications for family lawyers. their experience and to take notice of the inherent probabilities The content of this article is intended to provide a general could, as controller of the company, cause the property to be Prest, the issue of veil-lifting arose in a claim for ancillary reliefs following the divorce of Michael and Yesmin Prest. on trust for the controllers of those corporate/trust The Supreme Court also gave potentially far reaching guidance in The case is at least as important for company directors as for wealthy spouses. Others [2013] UKSC 34 has been a battle, through the English entitled Judges exercising family jurisdiction 'to draw on monies. question and the intentions of the person who provided the purchase He had argued that since he did not technically own the properties himself, as they were actually owned on paper by companies he had set up, the courts had no power to grant them to his wife: in effect, the properties were not his to give away whether he wanted to or not. case law since the 1897 case of Salomon v Salomon & Co Prest v Petrodel Resources Ltd [2013] UKSC 34. In 2013, the United Kingdom Supreme Court handed down a seminal judgment on the law of corporate veil, Prest v Petrodel Resources Ltd and Others UKSC 34, in which Lord Sumption proposed the evasion and concealment principles. If a right of property watertight paper trail as to the ownership of the assets in Family lawyers always get very excited about decisions handed down by the Supreme Court; after all, they don’t come very often. Stepping Around The Corporate Veil: Prest In Action, What Are The Charity Commission Filing Obligations For My Charity? Many of the assets (primarily properties in London) were held by overseas companies controlled by the husband. He was born in Nigeria and she in England. It remains to be seen post-Prest whether the appellate Lazarus Estates Ltd v Beasley [1956] 1 QB 702. non-compliance in the proceedings, Mr Prest's tax planning property out of their estate for inheritance tax purposes (although We need this to enable us to match you with other users from the same organisation, it is also part of the information that we share to our content providers ("Contributors") who contribute Content for free for your use. The case of Prest v Petrodel Resources Limited and Others UKSC 34 has been a battle, through the English High Court, Court of Appeal and Supreme Court, between the principles of corporate integrity on the one hand and fairness on divorce on the other, as much as between Mr and Mrs Prest and the companies in which Mr Prest had an interest. to the proceedings, to engage properly with the proceedings structures. marriage was held through these corporate structures. However, it is to be noted that: (1) ownership of the properties was vested in the companies prior to the breakdown of the marital relationship; and (2) there was no evidence that the husband’s actions in arranging for the companies to hold ownership of the properties was intended to evade any obligation to his wife connected with the divorce proceedings. controls the company as one and the same, only if the corporate 2. transferred to him. A closer look at your charity's obligation to file an annual return. 5. contrary. Specialist advice should be sought exists, it exists in every division of the High Court and in every When through the company and treat the company and a person who owns and Prest v Petrodel Resources Ltd UKSC 34, 2 AC 415 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law. The background to Prest v Petrodel concerned ancillary relief proceedings before the English courts following a divorce. This crucial finding meant that under ordinary trust law principles the properties were held for him on resulting trusts. or reversion' to property owned by a company simply because he The judgment of the Supreme Court in Prest v Petrodel Resources Ltd [2013] UKSC 34 was eagerly anticipated by family and corporate lawyers alike. divorce (in the same way that a company's creditors cannot seek a group of family companies then the entire set-up, when viewed as do not occupy a desert island in which general legal concepts are The separate personality. to enforce debts owed to the creditors by the company against him – he said he was in fact £48m in debt – and The case of Prest v Petrodel Resources Limited and Others [2013] UKSC 34 has been a battle, through the English High Court, Court of Appeal and Supreme Court, between the principles of corporate integrity on the one hand and fairness on divorce on the other, as much as between Mr and Mrs Prest and the companies in which Mr Prest had an interest. If a property forward? At first instance, Moylan J ordered Mr Prest to make, inter alia, a lump sum payment of £17.5 million to Mrs Prest. 19 [2000] 2 BCLC 794. look John Wilson QC , 1 Hare Court In the 24 hours since the Supreme Court published its landmark decision in Prest v Prestodel Resources Ltd & Others ("Prest") there has been a tsunami of commentary upon its … 1. circumstances, the Court may pierce the corporate veil and treat authorities, the provision of accommodation... from assets held by to the monumental decision in Prest v Petrodel Resources Ltd2 (Prest), case law recognized a horde of exceptions to the rule: these instances were, in the past, described interchangeably as the court ‘piercing’ or ‘lifting’ the corporate veil.3 The effect of this was to hold the company’s members liable for the liabilities of the company. companies in which Mr Prest had an interest. jurisdiction of the County Courts. Both sides of the profession were affected differently. available to address the wrong. Supreme Court made it clear that this is a wholly exceptional Part 1: The Annual Return, 'Blessing' Of Office Holder Decisions: Canargo Limited - In Liquidation ([2020] GRC064), Court Of Appeal Upholds Strict Interpretation Of The "Duomatic" Principle, Which Allows Informal Shareholder Approval Of Company Decisions, Getting At Trust Assets And Piercing The Corporate Veil. The Court may 'pierce the corporate veil', i.e. could not therefore be subject to an Order of the English Court on Whilst much of the commentary following Prest v Petrodel has focussed on the implications of the decision for English family law divorce cases, the Supreme Court’s comprehensive judgment describing in what circumstances the corporate veil may be pierced provides useful clarity as to the limited exceptions to the rule in Salomon. (12 June) 12 Jun 2013. If it does not exist, it does Those circumstances will exist only where a person is under an existing legal obligation or liability or is subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. marriage' has been made, 'which would include, on the The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34 (12 June 2013) March 22, 2018/in Company /Private Law Tutor. The Facts. The case raised important issues regarding the scope of section 24 of the Matrimonial Causes Act 1973, the doctrine of piercing the corporate veil and the law of resulting trusts. We have previously dedicated blog posts to so-called "No Oral Modification" or "NOM" clauses. This essay will argue the decision has done little to fault the Salomon principle. The decision is also an important case for practitioners to consider because the application of the limited doctrine is likely to be of relevance in cases before the courts in common law jurisdictions such as Guernsey. It is not intended as legal advice and should not be relied on as such. By classifying veil-piercing as evasion, his Lordship suggested that concealment cases were not truly veil-piercing. The law in this area has been rife with conflicting principles and many commentators felt that the Supreme Court decision in Prest v Petrodel provided a unique opportunity 3 to resolve the “never ending story” 4 of when the corporate veil can be pierced. Readership information is just for authors and is never sold to third parties using our website you agree our... It remains to be seen post-Prest whether the appellate courts will accept that rationale referred to as piercing... 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